Bad Creadit:Where to get a business loan?

On the up

Whats the best route to source a business loan of €5k?.
Previous bad credit from involvment with a construction company means that I cant get credit from banks.
The business is turning plenty of cash but is seasonal so will need a bridging loan for 9 months to get new products made and available to increase our presence in the market.
Who deals with such loans
Have considered the investor approach and have spoken to 3 interested parties but not keen on handing over a % of a thriving and profitable business to a stranger.
Had a loan offer but unfortunetly a change in circumstances has forced the person to withdraw their offer which kind of leaves us back to square 1.

Any pointers greatly appreciated

sandin

if the current business is profitable and trading well and has the figures to back it up, then previous history is not always a barrier.

AIB are one of the banks that still allow local managers give a certain amount of finance whereas in Ulster bank, everythign must go "upstairs" to head office.

A good accountant with bank contacts can be worth his weight in gold.

One important thing - even for €100, the bank will want up to date management accoutns and confirmation that taxes are up to date.

On the up

sandin wrote: »

if the current business is profitable and trading well and has the figures to back it up, then previous history is not always a barrier.

AIB are one of the banks that still allow local managers give a certain amount of finance whereas in Ulster bank, everythign must go "upstairs" to head office.

A good accountant with bank contacts can be worth his weight in gold.

One important thing - even for €100, the bank will want up to date management accoutns and confirmation that taxes are up to date.

Many thanks Sandin,makes sense but as the business has just started 4 months ago I'm not sure I will be taken seriously even though we have covered our cost within 24hrs of starting trading.
Mortgage arrears has put a nail in my loan coffin when dealing with banks even though payments are regular and the bank are happy to recapitalise.

The Apprentice

Dont give up do ...

I would hit the same 4 banks every ****ing month till they caved in ... Why u ask ??
Cause im bloody stubborn and driven just like you need to be to make this work. Fair play for getting off your hole !

antoinolachtnai

If you can find an equity investor, structure a deal where the investor buys into the company, but then gets bought out as the company generates a return. If you can offer a good return (20 percent per annum or more) you have a chance this way.

On the up

antoinolachtnai wrote: »

If you can find an equity investor, structure a deal where the investor buys into the company, but then gets bought out as the company generates a return. If you can offer a good return (20 percent per annum or more) you have a chance this way.

If I understand you correctly what I have in mind is similar?
Person invests 5k now
Feb 2013 that 5k is repaid in full
Feb 2014 a further 2.5k is paid
Feb 2015 a final 2.5k is paid over.
This I think is a good return on investment,maybe others would disagree.
The business has plenty of capacity to repay 10k in the first year but I feel it would comprimise my ability to reinvest and expand further in our 2nd year.

What do people think of the above terms.

What more should I could I do to attract investors,more to the point how do I get them?

antoinolachtnai

Well, 5000 euros at 20 percent would be more like 500 euros a month for 12 months. Not exactly that but closer. Figure out how to calculate returns!

It is a relatively small amount so it would probably cost more than that.

Does your business have/require stock? Or equipment? What do you actually want to do with the cash?

The next time you needed finance you would be in a stronger position and be able to get better terms. Eventually you will be able to refinance with the bank, if you keep at it.

On the up

antoinolachtnai wrote: »

Well, 5000 euros at 20 percent would be more like 500 euros a month for 12 months. Not exactly that but closer. Figure out how to calculate returns!

It is a relatively small amount so it would probably cost more than that.

Does your business have/require stock? Or equipment? What do you actually want to do with the cash?

The next time you needed finance you would be in a stronger position and be able to get better terms. Eventually you will be able to refinance with the bank, if you keep at it.

The 5k is needed solely for equipment to keep down hire costs and allow flexibility to take on extra projects to further lower our costs of production.
I believe the return on investment is good,its providing the investor with security that has me baffled

antoinolachtnai

The usual way to do this would be for the investor to buy the equipment. He would rent the equipment to you. You would insure the equipment. At the end you would buy the equipment from him outright. If you or your company went wallop in the interim he would still own his equipment and the other creditors would not be able to take it to satisfy a debt. This is broadly called equipment leasing. The equipment is the 'security'.

I have done some small time lease financing in my time. Your deal is really very small indeed, and that could be a problem. It is hardly worth an investor's while coming to your premises and getting to know you and your business for the sake of making 1000 euros in what is still a risky enough situation.

See if you can find someone you know already to help you with this deal.

Also, talk to the supplier of the equipment, particularly if they deal with trade-ins. Cash is tight all round and there are deals to be done if they know you and you can put up a deposit.

And talk to the hire place too! The last thing they need is you going off and buying your own gear somewhere else if they can avoid it.

TheCostumeShop.ie: Ronan

5K isn't enough to get an investor - get a credit card and pay it off as quick as possible. For the amount of effort you will go through to get it your much better off focusing on your unique selling point and making sales.

sandin

On the up wrote: »

Many thanks Sandin,makes sense but as the business has just started 4 months ago I'm not sure I will be taken seriously even though we have covered our cost within 24hrs of starting trading.
Mortgage arrears has put a nail in my loan coffin when dealing with banks even though payments are regular and the bank are happy to recapitalise.

Mortgage arrears , bad debt, poor credit records, whilst important, donlt always negate any funding, but what you need to do is get an acountant / business advisor - they can be worth their weight in gold and cost an awful lot less than you think.

Other options is to get the hire costs down based on projected future useage, see if family members will give a small loan, and try for short term extended credit with suppliers giving them the carrot of goood business down the line and possibly something they can call on if it doesn't work. - I know one guy who signed a document promising 100 hours work is a bill was not paid after 120days with a paint supplier. - luckily he was able to pay it, but the credit also enabled him set up.

On the up

antoinolachtnai wrote: »

The usual way to do this would be for the investor to buy the equipment. He would rent the equipment to you. You would insure the equipment. At the end you would buy the equipment from him outright. If you or your company went wallop in the interim he would still own his equipment and the other creditors would not be able to take it to satisfy a debt. This is broadly called equipment leasing. The equipment is the 'security'.

I have done some small time lease financing in my time. Your deal is really very small indeed, and that could be a problem. It is hardly worth an investor's while coming to your premises and getting to know you and your business for the sake of making 1000 euros in what is still a risky enough situation.

See if you can find someone you know already to help you with this deal.

Also, talk to the supplier of the equipment, particularly if they deal with trade-ins. Cash is tight all round and there are deals to be done if they know you and you can put up a deposit.

And talk to the hire place too! The last thing they need is you going off and buying your own gear somewhere else if they can avoid it.

Had that very arrangement offered to me but circumstances with that person changed and the offer was no longer available to me.At first I was not sure I would have been happy to accept but to be fair its probably the best system for both to minimise risk once all was done above board and transparent.

On the up

TheCostumeShop.ie: Ronan wrote: »

5K isn't enough to get an investor - get a credit card and pay it off as quick as possible. For the amount of effort you will go through to get it your much better off focusing on your unique selling point and making sales.

If I could get a credit card I'd have no trouble getting a loan so small with the business I have.
As said sales are seasonal so ploughing time and money into advertising and tramping the road at this time of year would reap little if any benefit.
It is a bridging loan that is required.

On the up

sandin wrote: »

Mortgage arrears , bad debt, poor credit records, whilst important, donlt always negate any funding, but what you need to do is get an acountant / business advisor - they can be worth their weight in gold and cost an awful lot less than you think.

Other options is to get the hire costs down based on projected future useage, see if family members will give a small loan, and try for short term extended credit with suppliers giving them the carrot of goood business down the line and possibly something they can call on if it doesn't work. - I know one guy who signed a document promising 100 hours work is a bill was not paid after 120days with a paint supplier. - luckily he was able to pay it, but the credit also enabled him set up.

Understood and again good advice.
I will need to be careful with that as the hirer is probably the only reputable operator in Ireland who carries what I need but also retail the equipment so they know if I dont rent I will have to buy.
Have dealt with them last year for hiring and it was a pleasure.May have to do the same again this year but it will seriously hamper any plans for expansion which is what bugs me the most.

Recessionbust

Just a Thought:

Sign the business over to someone in your family that you trust, Get them to apply for the business loan , Get them to sign the business back to you.
Sorted.

I ran into the same problems and done the above and low and behold it worked and I am now trading

balducci

try www.first-step.ie seeing as you are a new start up